ABSTRACT
The global microelectronics industry is in a state of upheaval. Revolutionary new technologies have altered the dynamics of the industry, destabilizing established patterns of production and trade: the industry has become more research and development and capital intensive and subject to significant economies of scale. The initial development of semiconductor technology was undertaken by established electronics firms in the United States. In the early 1980s the semiconductor industry reached a technological watershed, the transition to very large scale integration (VLSI) technology, which involves devices containing 1000 or more gate equivalents on a single chip. he technical demands of VLSI forced major changes in device design, manufacturing techniques, and device technology, and placed unprecedented pressure on microelectronics enterprises. The severity of the semiconductor recession which began in 1984, coupled with the various structural and financial stresses associated with the transition to VLSI, would have forced major adjustments on the US semiconductor industry even in the complete absence of foreign competition.
